Indian Economy Questions and Answers

Answer: D

Indirect taxes contribute about 86 per cent of the combined tax revenue.

Taking the Centre and the states together, the great bulk of tax revenue has historically come from indirect taxes - excise, customs, sales tax and now GST. This makes the Indian tax structure regressive, since indirect taxes fall on rich and poor alike as a proportion of what they spend.

Answer: B

The first wholly Indian bank was set up in 1894.

Punjab National Bank was founded at Lahore in 1894 with entirely Indian capital and Indian management - Lala Lajpat Rai was among its founders. The earlier Bank of Hindustan and the presidency banks were European ventures.

Answer: C

BIFR came into existence in 1987.

The Board for Industrial and Financial Reconstruction was set up under the Sick Industrial Companies Act, 1985 to determine whether a company was sick and, if so, whether it could be revived or should be wound up. It was abolished in 2016 when the Insolvency and Bankruptcy Code took over.

Answer: B

This is the Statutory Liquidity Ratio.

Every bank must hold a prescribed proportion of its net demand and time liabilities in cash, gold or approved securities. Raising the SLR leaves less for lending and so contracts credit. The Cash Reserve Ratio, kept with the RBI in cash, is the companion instrument.

Answer: D

All of these are redistributive.

Progressive taxation takes proportionately more from higher incomes; land reform redistributes the chief productive asset in a rural economy; and rural development programmes direct public spending towards the poorest. Each attacks inequality from a different side.

Answer: A

Because investment has been directed towards capital-intensive industry.

The Mahalanobis strategy of the Second Plan put resources into heavy industry, which absorbs little labour per unit of capital. Employment therefore grew far more slowly than output, and the surplus workforce stayed in agriculture - which is why the occupational structure has changed so little.

Answer: B

Essar Oil signed the accord.

It was the first Indian private company to obtain exploration rights in Myanmar's offshore blocks, entering a field where ONGC Videsh and GAIL were already present as public sector players.

Answer: B

They were also issued in Deutsche marks.

Resurgent India Bonds were floated by the State Bank of India in 1998, after the sanctions that followed the Pokhran tests, to attract foreign exchange from non-resident Indians. They were denominated in US dollars, pounds sterling and Deutsche marks, and raised about $4.2 billion.

Answer: B

India adopted decimal coinage in April 1957.

The rupee was divided into 100 naye paise from 1 April 1957, replacing the old system of 16 annas or 64 pice. The word 'naya' was dropped in 1964.

Answer: D

Inflation can be checked if all of these hold.

Deficit financing raises money incomes without raising output, and the excess demand shows up as inflation. If the spending goes into projects that increase supply, or if it merely repays debt without adding to demand, the inflationary pressure is contained.